How to Improve InCome Inequality

        The disparity between the rich and the poor in Hong Kong has been exacerbated. The widening wealth gap has sparked off many problems. It affects the social harmony and aggravates the intergenerational poverty. Combatting this problem requires immediate measures by the government.

The widening wealth gap has aroused social discontent and caused social instability. Social harmony is closely related to the economic condition of the public. Owing to the high rental prices and low wages, the rich become richer whereas the poor getting poorer. The rich are able to pursue luxurious lifestyles. On the other hand, the poor even cannot afford to buy the basic necessities. Many of the poor are living on the breadline. They aroused discontent and a growing resentment towards the rich. According to Clifford and Pau (2012), social unrest can be a result of resentment from the poor, for example, there are demonstrations in Shanghai and later turned violent. This shows that the social harmony is strongly affected by the widening wealth gap.

In addition to social instability, severe intergenerational poverty is another major impact caused by the widening wealth gap. There is a trend of rising expenditure on educating children, such as participate in life-wide learning activities and overseas programmes. Poon and Wong (2008) recognize that students from disadvantaged backgrounds cannot afford those life-wide learning activities due to financial hardship. This deprives children from low-income families of receiving better education. Therefore, they are less likely be admitted to prestigious school or receive tertiary education than students from rich families (“Education is key” 2013). Lower education level might be a stumbling block for the poor to climb up the social ladder and improve their living standard. As a result, the poor is still poor and their next generation might face the same situation as their previous generation. This situation will fall into a vicious cycle and aggravates the intergenerational poverty.

        The raising social instability is a cause for concern. To tackle this problem, the Hong Kong government should take some immediate measures. The government could increase the income tax rate and introduce redistributive taxes on inheritance, dividend and property appreciation ( Wang and Xia, 2012). By increasing the personal income tax rate, high-income group are required pay tax at a greater proportion than low-income group, while the low-income group are not affected. With the redistributive taxes, the rich need to pay more tax. Consequently, the post-tax income of the rich will decrease and the wealth gap between the rich and the poor will be narrowed, so as to maintain social stability.

        Regarding the severe intergenerational poverty, the government can address this challenge by increasing social welfare and social resources to the poor. In Law’s (2007, p.111) view, ‘’Tuition fees can be a barrier for students from poor families’’. That is to say, the government should provide financial assistance to poor families, such as increasing subsidies to underprivileged students to enable them to receive life-wide learning opportunity. Apart from the subsidies, the government could provide training programmes to the poor so as to increase their skills and competence and thus the poor can earn more money. The poor families will therefore have sufficient money to support their children's learning. This could help students from poor families to receive tertiary education and increase their social mobility. As a result, intergenerational poverty can be ameliorated.